Australian LNG potential at risk

Following the release of the IEA’s World Energy Outlook 2013, strict reforms to address Australia’s sliding cost competitiveness as an exporter of liquefied natural gas (LNG) are more important than ever.

The report from the International Energy Agency (IEA) says that Australia’s gas production growth would see the nation rival Qatar as the world’s largest exporter of LNG by 2020, however only if current plans to export are fully realised.

According to the report: “Commitments to new resource developments in Australia have slowed markedly over the last year or so, and the prospects for another round of major Australian LNG projects will depend heavily on how costs evolve, on the deployment of new, potentially less costly technologies, such as floating LNG, and on competition from other regions, notably North America.”

Australian Petroleum Production & Exploration Association (APPEA) CEO David Byers commented: “Not only is there increased competition from North America, there are offshore developments in East Africa, and the IEA has identified the possibility of Russia expanding LNG export capacity to reach into the coveted markets of Asia.

“Australia has enormous potential supplies of natural gas but if we fail to harness the opportunity to remain competitive in global markets further resources will remain undeveloped and jobs will be lost along with the potential for cheaper, cleaner energy and future tax revenues.”

According to the IEA, more than two-thirds of current global investment in LNG is in Australia, where there are already three LNG export projects in operation and a further seven under construction.

There are currently 12 LNG export plants under construction worldwide, with a combined capacity of around 130 billion m3 per year.